Murray Goulburn's milk intake has dropped 22 per cent this financial year, and will drop further to 2 billion litres by the end of the coming season.

Clint Jasper

Dairy processor Murray Goulburn will struggle to maintain the title of 'Australia's biggest', with its milk intake forecast to sit equal with New Zealand-owned rival Fonterra.

Announcing its full year financial results this morning, Murray Goulburn revealed its milk intake had dropped nearly 22 per cent from the previous financial year to 2.7 billion litres, and was expected to drop even further over the coming season to 2 billion litres.

"MG has experienced a difficult year as a result of the significant reduction in milk intake and adverse seasonal conditions," MG said in a statement to the Australian Stock Exchange on Tuesday.

The dairy cooperative made a $370.8 million loss, its revenue is down 10 per cent to $2.5 billion dollars and it is carrying $445 million in debt (reduced 7.5 per cent from the previous year).

Murray Goulburn's CEO Ari Mervis said the last year has "tested the resolve and strength" of suppliers, and said the "coming months would be pivotal for the future of the business".

The increase in supply has helped Fonterra's new cheese factory at Stanhope in northern Victoria, where the processor has picked up around 75 new suppliers from that region alone, representing 120 million litres of new milk supply.

Board confirms approaches

Murray Goulburn CEO Ari Mervis admits the drop in milk supply has made this a challenging year for the dairy processor.

It has discontinued product lines, including infant formula, after a strategic review was completed in May 2017.

The board of directors has commissioned a further review, engaging Deutsche Bank as an advisor.

Today the company confirmed Deutsche Bank had "received a number of confidential unsolicited indicative proposals from third parties".

"The Board has requested Deutsche Bank to seek more detailed proposals from these and other relevant parties, so as to enable MG to assess the merits of any proposals," the company said in a statement.

It said MG would only consider proposals that included paying a higher farmgate milk prices and increasing its access to capital.